Thoughts on COVID-19 and the Market Minute for April 2020

Thoughts on COVID-19

At the end of the month I normally spend my time researching market stats then summarizing them in my “Market Minute." My friends Paul and Val collaborate, film, and edit a video for me and I use that same content for my radio campaigns.

For the last week, like most of you I imagine, I have been glued to the TV following the COVID-19 pandemic and that influenced what I ended up researching.

I had assumed that the health care system in Italy was not at the same standards as Canada and that they had a substantially older population than we do. So, when I heard that BC authorities were preparing for the possibility that we could track the same as Italy, I initially dismissed it as not going to be that bad here.

After doing some research however, I learned that Italy’s health care system is ranked 2nd by the World Health Organization and Canada’s is ranked 12th. I also learned that 22.4 per cent of Italy’s population is over 65. In Canada, this is lower, at approximately 16 per cent. On the Sunshine Coast this number is much higher: approximately 29.6 per cent of the population here is over 65.

As the Sunshine Coast COVID Physician Task Force wrote in their March 27 update:

“The next two to four weeks will be a critical time period and it is imperative that we all continue to practise social distancing measures during this time. Our next steps beyond that will depend on how successful we are in containing COVID-19. We don’t want to put ourselves in a situation where we relax precautions too early and see a spike in infections, so it is likely that social distancing recommendations will be in place for a number of weeks, if not months.”

If you are not taking this seriously and following social distancing, you need to start.

If you are sharing “cures” for COVID-19 on social media or conspiracy theories that we should all be going back to work right away, you need to stop.

If your grandparent or other family member gets critically ill from COVID-19, goes to the hospital and dies, they will pass alone, without any family around them. There will be no funeral or celebration of life for a long time, if ever, and if you are the one that exposes them to this virus because you are not taking it seriously, you will have to live with that.

A good rule of thumb for social media is, if you don’t know for sure what you are sharing is true, don’t share it. Posting untrue things that diminish the collective consciousness and not taking social distancing seriously is not helping to flatten the curve.

The Canadian government and health officials both nationally, provincially, and locally have been excellent at communicating with the public on this pandemic and we can trust that, if a vaccine or some other treatment proves effective, they will let the public know. It is highly unlikely that they will rely on conspiracy theorists sharing on Facebook to get the message out.

Market Minute - April 2020

In an interview with Yahoo Finance Canada, Benjamin Tal, deputy chief economist at CIBC Capital Markets, has the following to say about Canada's real estate market: “The way I see it the housing market is basically frozen... no buyers and no sellers. That in a way will limit or even eliminate any notable downward risk to prices. Simply the number of sales will go down dramatically.”

We typically talk about the real estate market being a buyer's market, a seller's market, or a balanced market. Our quarantined COVID-19 world has introduced a fourth type of market: a market that's in stasis.

If you were thinking of selling this spring, my advice is to change your plans. Viewings are difficult, open houses have been cancelled, and it may be challenging to get professionals like home inspectors or appraisers to visit a property. Even appropriately marketing a home is near impossible; my photographer and videographer have suspended operation indefinitely. This means no fancy photos for buyers to swoon over and no video to differentiate your property from the competition.

Sellers that insist on listing their homes need to be ready to accept substantially less than they would have even a few weeks ago. Buyers have evaporated and the ones that are out there are expecting BIG discounts. Sellers should prepare themselves to see insulting low offers in the weeks and months to come.

It's a difficult time for buyers, too. Employment may be uncertain which could affect their ability to qualify for financing. And even if they can still be approved for a mortgage, Canadian mortgage rates have actually INCREASED despite big rate cuts by the Bank of Canada.

“The costs of funds for banks is skyrocketing and bank earnings are plunging,” said Sherry Cooper, chief economist at Dominion Lending Centers. “Every single business they have ever loaned to is subject to a massive decline in revenues, and therefore their own revenues are going down because nobody is taking out new business with banks except to extend debt.”

Rob McLister, founder of mortgage comparison website RateSpy.com, told BNNBloomberg that discounts on variable rate mortgages have decreased and five-year fixed rates are up compared to the end of February.

So, what do you do if you find yourself in the midst of a "real estate emergency," and your hand is forced? What if you absolutely, positively, no question about it, MUST sell your home in the immediate future? Call me and let me know about your situation. We'll either figure out how you can delay taking action or formulate an aggressive plan that gets you moving ASAP.

Real estate aside, remember to take care of yourself and your family. Be strict about your social distancing, wash your hands for at least 20 seconds, and occasionally take a break from the news and do something that'll make you smile.

Hang in there and call me if you need anything.

-Tony